Historically low mortgage rates have created a strong demand for homeownership in the state of Virginia but record low inventory has presented a challenge. In fact, the number of single-family homes available for sale statewide in August of 2020 was 42.2% lower than the previous year according to Virginia Realtors Chief Economist, Dr. Lisa Sturtevant.
Shift in Demand
With more homeowners remaining in their homes longer thanks to a refinancing boom, there are no signs the inventory of homes for sale will increase this year. However, new residential construction is on the rise with a shift in demand in rural and suburban markets, as well as larger single-family homes. In September of 2020, the number of permits issued for single-family homes accounted for more than 70% of all permits issued.
Permits for new single-family construction surged 15% in the third quarter of 2020 while permits for multifamily housing units decreased by 16% compared to the third quarter of 2019. 26,548 permits were issued for new housing units in Virginia from January through September of 2020. Year-to-date, about 78% of permits for new residential units were issued in the state’s largest metropolitan areas, (Northern Virginia, Richmond, Hampton Roads, and Charlottesville).
The number of residential building permits issued in Northern Virginia was down 24% during January through September of 2020 compared to the same period in 2019. Permits for new housing construction in the Richmond metro area was also down by 12% compared to 2019. Building permits were up by 15% and 3% in the Hampton Roads and Charlottesville areas, respectively with the number of residential building permits surging by more than 150% outside of these four metro areas in 2020. Although there is a significant inventory shortage in the state of Virginia this year, buyers can look forward to a bevy of new inventory to choose from in 2021.
- U.S. Census Bureau
- Virginia Realtors
- Dr. Lisa Sturtevant, Chief Economist for Virginia Realtors